What are The Legal Obligations of a Trust Management Firm?
A trust management firm acts as a legally appointed trustee of your revocable or irrevocable trust. The company can be a personal representative for your estate and offers many services, including helping you form a trust. Trustees employed by the company help to manage your finances and assets and handle the personal affairs of listed beneficiaries. Here are the legal obligations of a trust company:
Fiduciary Obligations
Trust companies act in the interest of listed beneficiaries, putting the interests of the beneficiaries above the firm’s. Performing this fiduciary duty requires managing the trust’s assets with care and loyalty, according to the trust documents. The trust management firm should comply with the terms and provisions of the agreement and will you sign, managing assets following your instructions.
Trust companies usually handle beneficiary communication, keeping everyone informed about the trust’s status and benefits. They also give notices and furnish information as laid out in the trust’s terms. All decisions are made in line with your wishes as the grantor. The trust company exercises reasonable skill and care and carries out its duty of confidentiality and impartiality to avoid conflicts of interest. You can also entrust the company to enforce and defend claims and segregate trust property accordingly.
Regulatory Compliance
Firms that manage your trust are obligated to comply with all relevant regulatory requirements, including tax laws. The company keeps up with regulatory changes and files annual returns and other reports required by state and federal regulators. Managing a trust involves a duty of account, which requires accurate and timely reporting and recordkeeping for all transactions involving the trust’s assets. The firm also has a duty to collect and maintain control of all assets.
All reporting needs to be transparent and auditable to guarantee the trust’s assets are accounted for. The company provides regular financial statements, updates, and reports, including tax filings and other relevant actions for managing the trust. Taxes are paid on trust income and filed within the timelines provided by the law to prevent fines.
Asset Protection and Growth
As fiduciaries, trust companies have a duty to keep the trust’s assets safe and secure. The assets may not be used for anything other than the sole benefit of the listed beneficiaries. All necessary measures are taken to protect the trust’s assets from fraud, theft, or loss. The trust will also be protected from overdue bills, missed tax payments, and unnecessary fees stemming from legal non-compliance.
Trust companies also have a duty to perform due diligence in all their actions to make the trust’s assets productive. The firms can invest assets to grow the trust, generate income, and manage the investment prudently. Leading firms diversify assets to avoid high-risk investments not accommodated in the trust documents. They also consult the grantor, if present, or beneficiaries and disclose any potential conflicts of interest.
Speak to a Trust Management Firm Today
Trustee companies usually offer a wide range of services, including managing financial assets, personal care management, and estate planning. Managing a trust requires careful attention to the terms of agreement and compliance with state and federal laws. Contact an experienced trust management firm today to learn more about fiduciary services, duties, and obligations.